Exploration & Production

Teapots eye petchem path

BEIJING

Several independent Chinese refineries are drawing up plans to build petrochemical complexes in east China’s Shandong province, aiming to join an investment boom in the world’s top chemicals market.

China is allowing greater access by global players and independent local companies to build new plants to help narrow an import gap of plastics, rubber and polyester as middle-class consumers chase high-end goods from cars to electronics.

US major ExxonMobil Corp and Germany’s BASF have announced multi-billion-dollar investments over the past two months as they look to rival local firms like Hengli Group and Zhejiang Rongsheng.

Facing tight cash flows and fierce competition in a saturated fuel market, China’s small refiners, known as "teapots", are also eyeing petrochemicals as a potential growth area, although analysts warn they will face big challenges in logistics and funding.

"The widely accepted notion among Shandong refiners is that if you don’t move into petrochemicals quickly enough you’ll die faster," said an executive at a Shandong refiner.

Shandong Shouguang Luqing Petrochemical Corp and Shandong Chambroad Group have each hired a state-run engineering firm for plant design, including processing technologies and capital spending estimates, said a second industry executive with knowledge of the matter.




More Stories



Tags